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Chancellor, George Osborne, this week delivered a brutal Comprehensive Spending Review (CSR) settlement for local government, imposing budget cuts of 28% by 2015, sweetened slightly by greater control over the remaining cash. As the dust settled on the CSR settlement, it quickly became clear local government was the biggest loser from a public sector austerity package which, Mr Osborne claimed, would help Britain ‘back from the brink' of economic disaster. That position was made clear in a league table of CSR ‘losers' published by auditor KPMG, headed by the CLG. LGA chair, Baroness Margaret Eaton, warned the impact of Mr Osborne's £82bn public spending cuts package would be so severe that key frontline services would be lost. ‘Savings on this scale are bound to hit services upon which people rely,' she said. Other critics said local economies reliant on public employment would be devastated, once organisations delivered the 490,000 public job cuts estimated by 2015. One housing expert told The MJ Mr Osborne had even ‘effectively abolished social housing as we know it' by withdrawing secure tenancies on low rents as part of his cuts package (see page 3). Addressing the House of Commons on 20 October, Mr Osborne revealed local government funding would be cut by 7.1% each year until 2015. The CLG later confirmed this would take the sector's ‘departmental expenditure limit' (DEL) from £28.5bn in 2010/11 to £22.9bn by 2014/15. ‘For local government, the deficit we have inherited means an unavoidably challenging settlement,' the chancellor said. A CLG assessment stated: ‘Councils will need to make tough choices to find significant savings while focusing on the key priorities of local residents.' Local government's required savings, the department said, could be achieved through smarter procurement; improved asset management; the delivery of more online services; and ‘streamlining and merging operations' – including plans to deliver the first place-based budgeting initiatives, previously dubbed ‘Total Place'(see page 3). Communities secretary, Eric Pickles, described the CSR as a ‘fair settlement' ‘Councils can protect frontline services providing they use the significant new freedoms we are giving them,' he claimed. Indeed, the chancellor confirmed Mr Pickles' plan to provide councils with greater freedom over how budgets were spent in future. ‘I can confirm that ring-fencing of all local government revenue grants will end from April next year. The only exception will be simplified schools grants and a public health grant,' Mr Osborne said. ‘Outside of schools, police and the fire service, the number of separate core grants which go to local authorities will be reduced from more than 90 to fewer than ten.' In total, the CLG estimated councils would have greater control over an additional £7bn of funding in 2011/12 following the removal of ring-fencing. Mr Osborne also promised further decentralising measures to ‘shift the balance of power from the central to the local' – many of which will be contained in the forthcoming Localism Bill. Town halls would, for example, assume greater control over benefits administration – including a localised council tax benefit system – but must deliver administrative savings in return. As expected, they have also been handed greater borrowing powers through the introduction of tax increment financing to fund regeneration programmes – although the cost of borrowing from the Public Works Loan Board will increase. Mr Pickles warned local authorities would have to restructure their workforce to ‘live within this settlement', and immediately made £200m available to help councils reorganise. For its part, the CLG faces a 33% reduction to its administrative budget over the CSR period. The MJ this week discovered that Mr Pickles could be planning to halve the number of CLG director generals as part of his own cuts. Summing up a bitter-sweet CSR period, Lincolnshire CC chief executive, Tony McArdle, said: ‘The next few months will be difficult, but this is a really good opportunity for local government. It will force us to focus on our priorities for the future.'

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WHITEHALL

The grim reaper

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